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The Best KPIs for Your Team
By VICKY BROWN
I bet you’ve heard the term KPI’s. If not, it stands for Key Performance Indicators.
Now, a lot of the time people mix up KPIs, Metrics and Goals – and they are related, but they aren’t the same thing.
Let’s start with Goals – when you set a goal, it’s usually a broad outcome that you or the organization is aiming to achieve. They set the stage for what you want to eventually achieve – something like ‘improve customer satisfaction over last year”.
Now, metrics are measurements that you can use to track the status of a specific process or goal – think of them as a specific data point, a snapshot in time. So, ‘how many customer complaints were received this month’.
KPIs on the other hand, are a specific sub set of Metrics – they’re chosen because they do a particularly good job of measuring the progress toward achieving the goal. You can think of KPIs as a kind of ‘super’ metric. So, in our example a good KPI might be – how many returns did we have this month.
Because you see, the number of product returns you get directly impacts how satisfied your customer is.
When you pull together the right set of KPIs and track them regularly, you should be able to get a really clear picture of how a department or company is doing.
Alright – now that all that is clear as mud – let’s talk a bit about some good KPIs you can use that will help you understand the health of the people side of your business. And yes, I know most times the HR team is tasked with tracking all this – but a simple spreadsheet, populated by the office manager, or the executive assistant, can provide a world of clarity for managers and leaders.
Remember, what isn’t measured, isn’t managed.
So, here are some good people related KPIs?
“…If this number is in the double digits – you’ve got a problem.“
Absence rate – this one is simple, just divide the number of days absent by the total working days. So if someone was out 15 days, and there was a total of 150 working days, then they were absent 10% of the time. Now I know the next question is – is 10% a good or bad number. Actually it’s less about that than it is about which way you are trending. Is the absence rate going up or down? That’s the important part.
But yes, if you’re measuring this for the first time – 10% is not good – it’s really high.
Next up – Average Time Stay; this shows you how long, on average, employees stay with you. You could also use the turnover rate for this measurement. Obviously, you want this number to be low – you don’t want an environment where people are constantly leaving. First, it very costly to replace someone, and second -it wreaks havoc with your productivity and the company’s culture. You need some level of stability, a core, to have a solid foundation.
Now, if you’re going to look at turnover rate, be sure to break them out into voluntary turnover and involuntary turnover – meaning how many people resigned (this could point to problems with a bad manager, culture, work engagement, benefits or pay); vs. how many people you terminated (which could point to lack of training or bad selection tactics).
And if you want to dig in even more, you could look at the 90 day or 180 day or 365 day quit rate – meaning, how many new hires quit early in their tenure. A high number here almost always points to bad selection, bad training or poor communication about what the job actually is (nothing gets people to quit faster than when they thought they were going to do this, but it turns out the job is a lot of that).
If this number is in the double digits – you’ve got a problem.
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One KPI I love to use is the Net Promoter Score, or NPS. Even if you haven’t ever heard it called that before, I’m sure you’ve completed one. When you get those survey questions from whatever vendor you just spoke with, and they ask you to rate them with a sad face, natural face or smiley face – well, that’s a version of a net promoter score. Generally an NPS measures the likelihood that someone would recommend your service or business to another person.
For obvious reasons, this measurement speaks volumes. When someone recommends you, they are putting their reputation on the line – and they wouldn’t do that if they didn’t think what you provided was valuable.
Well, the same can go for the people on your team. How likely are they to refer someone to work at your company? Again, this speaks volumes – not only are they putting their reputation on the line, but if they get it wrong, they’ll be needled by that person every day at work.
But seriously, when a team members says they are very likely to refer someone to work at your company, well, that’s a glowing badge of honor. You’re definitely doing something right.
Here’s one most people don’t think about – Overtime Hours. If the team is working a lot of overtime then either work isn’t being properly allocated, or you just have too few people. And that’s going to lead to burnout. So, it’s a good idea to keep an eye on this number. Besides – overtime is expensive too.
It’s also a great idea to keep an eye on your demographics. Gender, ethnicity, disability, and age diversity.
And you should also remember that these KPIs can (and should) be used not only at the overall company level, but at the department or work group level as well. You want each piece of the puzzle to be well balanced.
Now again, the secret sauce of all these KPIs is measuring over time, and looking at the trends. Are the good lines going up and the bad ones going down? I think the most valuable use of KPIs is to see how you’re doing, and where you’re going.
So, don’t be afraid to set, measure and analyze a good set of KPIs. You might find that it’s the most valuable dashboard you have in your toolbelt.
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